Karpuz, A. orcid.org/0000-0003-2746-6428, Ozkan, N. and Yin, J. (2025) Uncertainty and loan pricing for public and private firms: evidence from the Brexit referendum. European Journal of Finance. ISSN 1351-847X
Abstract
We examine the impact of uncertainty on loan pricing for public and private firms in the UK, using the 2016 Brexit referendum as an exogenous shock of uncertainty. We find that uncertainty leads to a significantly higher cost of borrowing for private firms relative to public firms. However, firm-level foreign exposure, i.e. foreign sales and subsidiaries in the foreign markets, mitigates the adverse impact of uncertainty on loan prices more for private firms than public firms. Moreover, uncertainty increases the number of financial covenants in loans for public firms with high information transparency (i.e. constituents of FTSE 100/250). However, we observe a decline in the number of financial covenants in loans for private firms with low information transparency (i.e. private firms without institutional investors) under uncertainty. Overall, we provide novel evidence highlighting the differences in the design of syndicated loan contracts between public and private firms under uncertainty.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | This is an author produced version of an article published in the European Journal of Finance, made available under the terms of the Creative Commons Attribution License (CC-BY), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited. |
Keywords: | Brexit; syndicated loan contracts; foreign exposure; private firms |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 04 Feb 2025 09:44 |
Last Modified: | 04 Feb 2025 09:44 |
Published Version: | https://www.tandfonline.com/doi/full/10.1080/13518... |
Status: | Published online |
Publisher: | Taylor & Francis |
Identification Number: | 10.1080/1351847x.2024.2449521 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:222855 |
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